The Kwok Company\'s inventory balance on December 31, 2013, was $245,000 (based

Question

The Kwok Company's inventory balance on December 31, 2013, was $245,000 (based on a 12/31/13 physical count) before considering the following transactions:

Goods shipped to Kwok f.o.b. destination on December 20, 2013, were received on January 4, 2014. The invoice cost was $46,000.

Goods shipped to Kwok f.o.b. shipping point on December 28, 2013, were received on January 5, 2014. The invoice cost was $33,000.

Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2013, were received by the customer on January 3, 2014. The sales price was $56,000 and the merchandise cost $38,000.

Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2013, were received by the customer on December 30, 2013. The sales price was $36,000 and the merchandise cost $29,000.

Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2013, were received by the customer on January 4, 2014. The sales price was $41,000 and the merchandise cost $28,000.

The Kwok Company's inventory balance on December 31, 2013, was $245,000 (based on a 12/31/13 physical count) before considering the following transactions:

Explanation / Answer

unadjusted inventory balance = 245000

1) no need to include anything since goods werenot recieved untill jan 4,2014 ...hence need not include in dec31,2013 inventory)

2) ADD 33000

since the goods are already shiped and hence they belong to Kwok

3)ADD 38000

since untill they arrive at destination...they belong to Kwok

4) no adjustment

since they arrived at destination

5) no adjustment

since it is a fob shipping point...once they the goods are shipped they does not belong to Kwok

hene

ADJUSTED ending inventory = 245000 + 33000 + 38000 =316000

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